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Integrated Nursing & Health Services Inc. v. Centers For Medicare & Medicaid Services

United States District Court, D. Minnesota

April 13, 2017

Integrated Nursing & Health Services Inc., Plaintiff,
Centers for Medicare & Medicaid Services, Defendant.

          Todd Franck, Esq., Franck Law Office, counsel for Plaintiff.

          Ana H. Voss and James S. Alexander, Assistant United States Attorneys, United States Attorney's Office, counsel for Defendant.


          DONOVAN W. FRANK United States District Judge


         This case involves a dispute arising from Defendant Centers for Medicare & Medicaid Services' (“CMS”) decision to suspend Medicare reimbursements to Plaintiff Integrated Nursing & Health Services, Inc. (“INHS”) after CMS concluded that there were credible allegations of Medicare fraud. INHS has moved for a temporary restraining order releasing the suspended payments. CMS argues, among other things, that the Court lacks subject matter jurisdiction. For the reasons discussed below, the Court concludes that it lacks subject matter jurisdiction. The Court therefore denies Plaintiff's Motion for Temporary Restraining Order (Doc. No. 13) and dismisses Plaintiff's Amended Complaint (Doc. No. 12 (“Am. Compl.”)) without prejudice.


         A. Factual Background

         INHS is a Minnesota corporation that provides home-healthcare services in mostly Hennepin County, Minnesota. (See Am. Compl. ¶ 7.) INHS employs 17 people and provides services to approximately 40 homebound patients. (Doc. No. 17 ¶¶ 4-5.) CMS is a federal agency vested with overseeing, among other things, the Medicare reimbursement program. Here, CMS used AdvanceMed, a Medicare contractor, as its main contact point between the parties.

         Pursuant to Medicare's regulations, CMS may suspend Medicare reimbursements “in whole or in part” if it has been “determined that a credible allegation of fraud exists against a provider or supplier.” 42 C.F.R. § 405.371(a)(2). The suspension can occur with or without prior notice. If, as here, the suspension occurs without prior notice, CMS must still offer the healthcare provider the opportunity to submit rebuttal information “as to why the suspension should be removed.” Id. § 405.372(b)(2). If CMS decides, however, that despite the rebuttal evidence, the suspension will continue, then the healthcare provider does not have a right to appeal until a final determination on the fraud allegations. See Id. § 405.375(c).[1]

         On January 31, 2017, AdvanceMed notified INHS by letter that CMS had suspended Medicare reimbursements after receiving credible allegations of Medicare fraud. (Doc. No. 12-1 (the “Suspension Letter”).) The Suspension Letter identified five examples of suspected submissions and stated that while the investigation was ongoing, all of Plaintiff's Medicare reimbursements would be reviewed and withheld in an escrow account. The Suspension Letter also stated that the suspension had been in place since January 24, 2017. The Suspension Letter gave the Plaintiff an opportunity to reply, but also explained that the Plaintiff had no right to appeal. (Id.)

         On February 6, 2017, Plaintiff replied essentially asking for more details about the fraud allegations. (Doc. No. 12-2.) Plaintiff also submitted documentation to authenticate the allegedly fraudulent submissions identified in the Suspension Letter. (Id.) AdvanceMed wrote back on February 24, 2017, stating that the suspension would continue based on federal indictments alleging that INHS's owner Roylee Belfrey was involved in a scheme to commit Medicare fraud. (Doc. No. 12-3.) AdvanceMed also stated that CMS would not review the documentation provided by Plaintiff because CMS had reason to question the documents' accuracy given the indictments. (Id.) The letter reiterated that the decision to suspend payments was not appealable. (Id.)

         B. Plaintiff's Complaint

         On March 30, 2017, Plaintiff filed its Amended Complaint alleging four claims that all essentially seek the same remedy: an order releasing the escrowed payments. First, Plaintiff seeks mandamus relief to release the suspended payments based on CMS's refusal to review the documentation supporting the allegedly fraudulent claims. Second, Plaintiff alleges that it was defrauded by CMS when CMS stated in the Suspension Letter that it would review rebuttal documentation, but then refused to do so. As a result of the fraud, INHS alleges that it has suffered $228, 000 in damages (the amount of the suspended payments). Third, Plaintiff alleges that CMS breached an unidentified statutory and fiduciary duty by failing to review the rebuttal documents. And fourth, Plaintiff alleges that its constitutional due-process and equal-protection rights were violated when CMS did not undertake a proper review of the rebuttal evidence.

         On April 4, 2017, Plaintiff moved for a temporary restraining order requiring Defendant to release the suspended funds. (Doc. No. 13.) Plaintiff argues that unless the suspended funds are released, it will have to close. In its response, CMS ...

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